What Worked Australia - 27 May 2016 - Value off again, Earnings Revision momentum up

What Worked – Directionless week with nothing finishing up the week above our “watch” threshold of +/-10%. Value was off again this week, in what can only be described as a fly-in-fly-out situation, a few weeks on before taking a couple of weeks off. The poor performance in the value space this week was, however, confined to the earnings based metrics, rather than across the board. Forward PER produced a quintile spread of -1.1%, with names like Qantas (QAN, -7.7%), Nine Entertainment (NEC, -2.5%) and Spotless Group (SPO, -8.6%) all amongst the cheapest of the bigger end of the index, and all off sharply. On the other end of the scale however, Santos (STO, +4.3%), Technology One (TNE, +7.4%) and Spark Infrastructure (SKI, +5.5%) all saw good returns for the week, making them all the more expensive on a forward PER basis.

Recent Earnings Revisions momentum (1 month) was really the only other signal to produce a significant result this week, although was in large part across the board, rather than the names with good (poor) revisions gaining (retreating). That being said, Flight Centre (FLT, -10.8%), Orica Limited (ORI, -1.9%) and Wesfarmers (WES, -3.8%) all off this week on the back of negative EPS revisions, while Aristocrat (ALL, +2.4%), BlueScope Steel (BSL, +5.0%) and James Hardie (JHX, +5.4%) all saw good gains with strong revisions.

Who Moved – Not a great week volume wise with only 10 names moving on significantly higher than normal volumes. On the winning front, Kathmandu Holdings (KMD, +5.6%), Henderson Group (HGG, +3.5%) and Ansell (ANN, +2.0%) all gained more than the index backed by volume, while Dexus Property (DXS, -1.3%), Metcash (MTS, -0.2%) both lost out.


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